Motor Finance Compensation — Can I Claim?

The Financial Conduct Authority (FCA) has initiated a comprehensive review aimed at determining the possible compensation owed to individuals who might have been charged excessively for motor finance before the ban of discretionary commission arrangements in 2021. This investigation stems from growing concerns that motor finance companies are unjustly rejecting mis-selling claims against lenders.

Individuals who have held motor finance agreements over the past several years might have incurred higher costs due to undisclosed commissions charged by their lender or dealer. The FCA’s probe aims to scrutinise these practices and ensure fair treatment for consumers.

The Financial Ombudsman Service (FOS) has received feedback from over 10,000 individuals expressing concerns about potential overcharging. Additionally, legal firms in the UK, including Barings Law, have encountered a substantial number of enquiries and claimants over the past couple of years related to similar complaints.

The FCA has temporarily paused the deadline that motor finance firms have to respond to complaints about discretionary commissions as they investigate. This is expected to be resolved by late September 2024.

Barings Law has taken proactive steps by filing 6,000 claims with the courts, and there are more in the pipeline. Barings Law having initiated legal proceedings independently years ahead of the Financial Conduct Authority’s (FCA) temporary pause for investigation, continues to progress unaffected by the regulatory hiatus. As a result, our operations remain unaffected, allowing us to continue advancing and welcoming new claimants.

We appreciate the FCA’s decision to investigate, recognising it as a crucial move against lenders and brokers who have been manipulating interest rates to inflate their commissions.

Since this development, Barings Law has experienced a surge in enquiries. We’re here to address frequently asked questions, provide insights into the distinctions between claiming through FOS and Barings Law, and share our contact information for those seeking assistance.

What forms of car finance are affected?

The primary focus of the FCA’s investigation lies in PCP (Personal Contract Purchase) and HP (Hire Purchase) contracts, specifically those involving an APR (Annual Percentage Rate) form of interest. This refers to the variable interest rate that finance providers may adjust to increase discretionary commission.

How do I know if I am eligible to submit a claim?

If you bought a car or van using motor finance before 28 January, 2021 on a PCP (Personal Contract Purchase) or HP (Hire Purchase) contract, you will be eligible to submit a claim.
To be eligible, your lender and car dealer, acting as a credit broker, must have had a ‘discretionary commission arrangement’ in place. This arrangement linked higher interest rates to increased commission for the broker, and this information was likely undisclosed to you.

What is the difference between submitting my complaint with FOS and Barings Law?

Barings Law has initiated legal proceedings independently of the Financial Conduct Authority’s (FCA) temporary pause for investigation. As a result, our operations remain unaffected, allowing us to continue advancing and welcoming new claimants.

While individuals have the option to approach the ombudsman, it’s important to note that there is currently a hiatus on any related proceedings, anticipated to last at least 37 weeks. However, it’s crucial to clarify that our activities and progress are not impacted by this pause, and we are fully operational during this period.

I’m still paying for my contract – can I claim?

If you purchased your vehicle on car finance before January 28, 2021, and you are still in the process of repaying your contract, you remain eligible to make a claim as the contract predates the regulatory changes.

Can I claim for multiple contracts?

You can submit a claim for any vehicle you took out on a PCP contract before 28 January, 2021.

How much compensation am I likely to receive?

The compensation amount will vary on a case-by-case basis.

The amount customers have been overcharged will fluctuate, with the total depending on the cost of the vehicle, the interest rate applied, and the duration of the contract.

How do I claim?

You can submit your no-win no-fee claim to us by clicking on the button below. This will take you to our claim page where you can find more information about Motor Finance and fill in our quick and easy form to start your claim with us.